24 Jun 2010: Analysis

In the Battle to Save Forests, Activists Target Corporations

Large corporations, not small-scale farmers, are now the major forces behind the destruction of the world’s tropical forests. From the Amazon to Madagascar, activists have been directing their actions at these companies — so far with limited success.

by rhett butler

The image of rainforests being torn down by giant bulldozers, felled by chainsaw-wielding loggers, and torched by large-scale developers has never been more fitting: Corporations have today replaced small-scale farmers as the prime drivers of deforestation, a shift that has critical implications for conservation.

Yet while industrial actors exploit resources more efficiently and cause widespread environmental damage, they also are more sensitive to pressure from consumers and green groups. As a result, activists have more power today than ever to affect corporate behavior and slow the dizzying pace of tropical deforestation worldwide. That power has been on display in recent months, as campaigns by environmental groups have forced major corporations to stop doing business with companies accused of widespread deforestation.

Unilever, the consumer products conglomerate, and other corporations recently canceled contracts with palm oil producers in Indonesia after investigations by Greenpeace and the BBC revealed that these companies were engaged in illegally clearing forests. Late last year and early this year, a campaign by ecotourism companies and the conservation group, Forests.org — a Web-based activist group — succeeded in forcing some European companies to stop trading in rare rosewood illegally logged in Madagascar.

The forces driving deforestation are seeking ways around corporate boycotts.

Burger King hamburgers and Nike shoes, the fallout has been profound. Now, major buyers of Amazon beef and leather goods, including Wal-Mart, are insisting on new sourcing policies in Brazil requiring full traceability and transparency from their suppliers to ensure that cattle products aren’t coming from former rainforest.

These developments illustrate an important shift in the battle waged by conservation groups to slow the destruction of tropical forests. Yet such success stories are not as clear-cut as they might appear at first glance. In many cases, after an initial victory by environmentalists, the forces driving deforestation have regrouped and are seeking ways around corporate boycotts.

For decades, deforestation was mostly driven by poverty — poor people in developing countries clearing forests or depleting other natural resources as they struggle to feed their families. Government policies in the 1960s, ‘70s, and ‘80s helped drive this trend by subsidizing agricultural expansion through low-interest loans, infrastructure projects, and ambitious colonization schemes, especially in the Amazon and Indonesia.

But over the past 20 years, this has changed in many countries due to rural depopulation, a decline in state-sponsored development projects, the rise of globalized financial markets, and a worldwide commodity boom. Deforestation, overfishing, and other forms of environmental degradation are now primarily the result of corporations feeding demand from international consumers.

Seizing the opportunity to apply pressure on international corporate giants, activists have recently launched campaigns worldwide to slow the

destruction of tropical forests. In 2008, Greenpeace ensnared Unilever — the world’s largest buyer of palm oil — in a scandal when Greenpeace claimed the company’s supplier was involved in forest destruction in Borneo. Hiring an independent investigator, Unilever learned that the palm oil supplier, Sinar Mas, was indeed illegally clearing rainforests and carbon-dense peatlands.

Last December, Unilever canceled a $32.6 million contract with a subsidiary of Sinar Mas, and earlier this year several more major buyers dumped Sinar Mas. Unilever subsequently blacklisted Duta Palma after a BBC documentary in February showed the Indonesian company was engaged in clearing protected forest for palm oil plantations.

However, Unilever softened its stance in early April, as company officials said they would consider buying palm oil from a Sinar Mas subsidiary if the company demonstrated that it is no longer involved in illegally logging forests.

In the Amazon, Greenpeace released the report last June linking deforestation by cattle ranchers in the Amazon to major consumer products, including Gucci handbags and Nike shoes. The fallout was immediate: Brazil’s cattle industry — the largest in the world and a dominant force in Brazilian politics — was brought to a standstill virtually overnight. Brazilian officials raided the offices of the country’s cattle giants and suspended or revoked some of their loans. Several of the cattle companies’ biggest buyers publicly rebuked the firms and demanded greater accountability for their supply chains.

Wal-Mart, Nike, and Timberland — all identified in the report as buying leather products or meat that came from cattle raised on deforested Amazon land — immediately announced new sourcing policies requiring full traceability and transparency from their suppliers to ensure beef and leather products weren’t coming from former rainforest. Under pressure from their customers and the government — which threatened billions in fines — Brazilian cattle producers, processors, and traders fell into line, declaring moratoriums on deforestation. The hottest commodity in the Brazilian Amazon became credible supply-chain management, spawning a rush to develop certification systems and land registries for “responsible” ranches.

“The industry — from Nike and Adidas to the slaughter plants — is under pressure to have a clean supply chain,” said John Carter, a rancher who runs Alianca da Terra, a Brazilian NGO developing a certification system for the cattle industry. ”Greenpeace essentially created a federal mandate that everyone had to come into compliance via a land registry. Greenpeace changed the game.”

Madagascar’s coup leaders are apparently complicit in the lucrative trade, making it difficult to address the issue on the ground. So the pressure point for rosewood trafficking — at least in the short term — is foreign shipping companies. Confronted by tour operators whose business depends on national parks and wildlife, three companies — Spanfreight, Safmarine, and UAFL — immediately stopped transporting rosewood from Madagascar.

However, a French company, Delmas, continued carrying rosewood for months, making it a clear target for environmentalists. When word leaked

Many corporations are learning that it’s bad business to engage in environmentally poor practices.”

about an impending shipment scheduled for late December, Forests.org seized on the opportunity, bombarding the company and the French government with thousands of messages, arguing that Delmas was undermining France’s negotiating position at climate talks in Copenhagen and facilitating the destruction of Madagascar’s national parks.

The campaign proved too much for Delmas, and in December the company canceled a major rosewood shipment worth an estimated $20 million to $60 million to traders. However, the company resumed shipments in March, prompting intensified campaigns by Forests.org and the Environmental Investigation Agency, a conservation group. That pressure prompted the government in Madagascar to accede to a ban on exports of rosewood and precious timber for two to five years.

“It’s really impressive that environmental activists have influenced a major corporation such as Delmas,” said William Laurance, a researcher at James Cook University in Australia, who has analyzed the transition from poverty-driven to industrial-driven deforestation. “Many corporations are learning that it’s bad business to engage in environmentally poor practices.”

But while the campaign achieved its short-term objective of blocking the rosewood shipments, the subsequent response from traders reflects the difficulties of going after corporate transgressors. For example, after a consumer in Germany complained to authorities that Theodor Nagel & Co., a major tropical timber importer based in Germany, was advertising “Madagascar rosewood” on its Web site, the company replaced “Madagascar” with “Brazilian.” Nagel said it had the proper permits to import rosewood from Madagascar, although conservationists note that many export documents in Madagascar are fraudulent, and the company is now under investigation.

Furthermore, traders in Madagascar are now reportedly looking for more discreet ways to ship rosewood. They may find that channel through Chinese freighters, whose owners have fewer qualms about international criticism.

Greenwashing — or misrepresenting the environmental qualities of a product — is another common strategy used by companies that come under fire.

A prime example is the new emphasis by Asia Pulp & Paper (APP) — a subsidiary of Sinar Mas — on being green. The company has long been notorious in activist circles for its poor environmental record, but major

The palm oil industry, which has consumed vast tracts of forest, is legendary for its greenwashing efforts.

companies continued to buy from APP until consumer-oriented campaigns led by the Rainforest Action Network, Forest Ethics, and WWF, among others, accelerated a few years ago. In short order, some of APP’s most prominent buyers — including Staples, Office Depot, Wal-Mart, Woolworth, and Gucci Group — canceled contracts with the company. In addition, the Forest Stewardship Council, the green standard for certifying forest products, severed its association with APP.

To stem the loss of customers, APP hired a leading PR firm and launched a campaign rebranding itself as a leader in sustainability. Its new Web site features bird sounds and verdant forests while proclaiming its support for “economic, social, and environment sustainability.” The company also is running ads on CNN touting its green credentials.

“There’s been a growing sense of risk in the marketplace around doing business with APP,” explained Lafcadio Cortesi, forest campaign director at the Rainforest Action Network. “However, instead of responding to customer demands for reform on the ground, APP has dramatically increased their public relations activities and environmental claims.”

For example, in response to concerns that the company’s activities are worsening global warming, APP hired consultants to draft a report detailing the modest carbon footprint of its business. But that report failed to account for the bulk of their emissions, produced when they drain peatlands or cut down natural rainforests, Cortesi said.

At the same time, Cortesi said, APP is hiding behind a new set of marketing channels by creating or buying smaller companies that sell APP papers under different brands touted as “environmentally friendly.” One such example is Eagle Ridge Paper. In February, 10 environmental groups in North America — including the Sierra Club, Greenpeace, the Natural Resources Defense Council, and the Rainforest Action Network — issued a statement saying that Eagle Ridge was a new “marketing and distribution” arm for APP and urging major buyers, such as Staples, not to sell Eagle Ridge paper products.

But the logging industry is not alone. The palm oil industry is legendary for its greenwashing efforts. For all the virtues of palm oil as the world’s highest-yielding source of vegetable oil, expansion over the past 25 years has consumed vast tracts of forest across Indonesia and Malaysia.

But instead of acknowledging this and addressing concerns head-on, marketing bodies for the industry have tended to expend efforts on denial and greenwashing. The integrated market campaign includes Web sites, blogs, think tanks, editorials, and advertisements.

Since the government’s collapse after a coup in 2009, Madagascar’s rainforests have been plundered for their precious wood and unique wildlife, reports Rhett Butler. But there are a few encouraging signs, as officials promise a crackdown on illegal logging and ecotourists begin to return to the island.READ MORE

One industry video used iguanas and hummingbirds — species found nowhere near Malaysia — to suggest that biodiversity thrives in palm oil plantations, despite a large body of scientific studies showing that oil palm estates are biologically impoverished compared even with heavily logged forests. Yusof Basiron, CEO of the Malaysian Palm Oil Council — the government-backed marketing arm of the Malaysian palm oil industry — has gone so far as to claim that endangered orangutans benefit from living in proximity to oil palm plantations. Environmentalists scoff at the notion, maintaining that oil palm expansion is one of the greatest threats to orangutans.

These efforts illustrate the extent to which some companies will work to mislead consumers. However, some industry executives realize it will take more than deception to alleviate environmental concerns, and are working to improve environmental performance through certification programs that set standards for production and distribution.

These are dependent, however, on consumer preference for “greener” products. In some markets — notably India and China, but even, in some cases, in the United States and Europe — there is little willingness among consumers to pay a premium for eco-friendly goods. So while some palm oil producers have thrown their weight behind a certification program devised by the Roundtable on Sustainable Palm Oil (RSPO), demand for certified sustainable palm oil has been slow to materialize. In the end, consumer apathy could prove to be the biggest threat to greening the supply chain, and activist groups may increasingly find themselves having to call attention to environmentally friendly companies.

COMMENTS

Great article! Explains why we're seeing more reaction from companies on these campaigns. The palm oil growers are notorious.

Posted by
Charlie Kincaid
on 24 Jun 2010

Yes, Very good piece except it contains a very common but erroneous statement about the historic causes of deforestation; that it is caused by poor farmers. This was disproved by Marcus Colchester of Survival International over three decades ago. In order for the poor to migrate into primary forests, they need roads, both to get there and to get their products out to the market. In most cases, this will be a logging, mining, or oil and gas road. These roads were built by large corporations or the government via the World Bank. So really, not much has changed.

Posted by
mike roselle
on 24 Jun 2010

Mike,

The article makes a distinction between government/multilateral development bank (MDB)-financed infrastructure projects of the 1960s-1980s which were ostensibly development-focused (i.e. geared towards colonization, land redistribution, national security) and the current era of infrastructure projects primarily focused on resource extraction (industrial-scale agriculture, logging, mining, and ranching). For example Brazil and Indonesia are no longer financing massive relocation programs; instead money is going towards the development of export-oriented industries, often at the behest of agroindustrial and other business lobbies.

Posted by
Rhett (the author)
on 24 Jun 2010

This is an interesting perspective but now that I think about it, makes sense that it's easier to demand sustainable practices from big corporations than small-scale farms.

Posted by
Robyne Loren
on 24 Jun 2010

Difficult call to make. Sure, many large companies have been destructive, as have many local communities. Fly over or visit any area in Kalimantan or Sumatra and you will find that both are part of the same problem. It is just easier to attack well-known companies than millions of 'faceless' farmers.

A recent interview survey of 7,000 local people in Kalimantan showed that >50% were in favor of further forest clearing. If societies were democratic that would mean more forest clearing. In the end it is about economic development: getting people to a level of welfare, education, environmental awareness etc. in which they can actually afford to care about the environment they live in. Such economic development can be brought about and planned poorly or well, but use of natural resources will somehow play a role.

We should focus on guiding the process as well as we can. Asking countries like Indonesia to forego 20 billion in palm oil earnings or 3% of its GDP is a tough call to make (try asking the UK or US to do that and see what they say). The distinction between big business (the corporations Rhett talks about) and small business (the small-scale farmers) is not always helpful. They are both threats and necessarily part of the solution. NGOs should consider their positions very carefully and identify when to push back and when to be more constructive with corporations. Blackwashing can be as unhelpful as greenwashing.

The "proper permits" claim is always dubious when issued by under-resourced forestry departments in countries where the necessary paperwork is easily 'bought'.

And when the country in question is on the brink of collapse - Madagascar in this case - making such claims is scandalous.

I am hopeful that the EU's proposed 'due diligence' legislation, scheduled to come into effect in 2012, will finally force such companies to face up their responsibilities in ensuring that the timber they import is legal:

http://soundandfair.org/eu-to-ban-illegal-timber-imports-by-2012

NEIL BRIDGLAND
www.soundandfair.org

Posted by
Neil Bridgland
on 25 Jun 2010

In addition to my above comments, I'd like to add that your conclusion about the possible need for campaigners to support eco-friendly companies in the absence of consumer demand, is at odds with our experience of trying the establish trade in sustainably harvested, FSC-certified African blackwood in the woodwind music industry.

When we embarked on the campaign in 2008 we envisaged our biggest challenge being to persuade consumers to pay an end-product price premium.

Two years later we're battling with the intransigence of manufacturers unwilling to face up to need for sustainable procurement practices and the relatively small price premium associated with certified timber.

And we remain confident that others will gravitate towards then in due course.

Posted by
Neil Bridgland
on 25 Jun 2010

"In order for the poor to migrate into primary forests, they need roads, both to get there and to get their products out to the market. In most cases, this will be a logging, mining, or oil and gas road. These roads were built by large corporations or the government via the World Bank. So really, not much has changed. "

Mike Roselle hit the nail squarely on the head. But I think the buck stops with governments, who have the authority to prevent or allow new road construction. Were the US and the UN, etc., were to exercise their leadership mandate, they'd incent all governments to prohibit roads into forested lands.

Posted by
Trevor Burrowes
on 28 Jun 2010

Good article. You have probably seen the May 4, 2010 report by Rainforest Action Network re illegal activities by RSPO member CARGILL (http://ran.org/cargillreport) and the article "Round Table on Responsible Soy a Green Wash" by Institute of Science in Society.

Uniliver appears to be trying -- they recently announced they had enough GreenPalm certificates of sustainable palm oil for their European, Australian and New Zealand businesses.

I wonder if most people even know how many processed food products now contain palm oil and soy. I've started reading labels and not buying them. Reducing demand is part of the answer.

Posted by
Patricia
on 06 Jul 2010

Good article Rhett.

Your discussion of the increasing risks of greenwashing in this age of instant communication is very compelling. Clearly, taking action on the ground to improve sustainability and to communicate these efforts transparently is the preferred approach. Unfortunately, as your critique of the palm oil industry for widespread greenwashing demonstrates, a few bad apples or past mistakes can sully the reputation of the industry as a whole and overshadow the laudable efforts by many corporations and small farmers striving for environmental and economic sustainability of their operations. There are many producers that already abide by the rigorous sustainability standards of the RSPO - especially in Malaysia where environmental laws and regulations on palm oil producers are already enforced. Despite a current lack of financial incentive due to a reticence on the consumer side to tolerate higher prices for certified palm, the number of farms pursuing the lengthy and costly RSPO certification process continues to grow.

Labeling the palm oil industry as “legendary for its greenwashing” discredits these efforts and fuels the ongoing frustration among producers that nothing is ever good enough for the environmentalists so why even try. Like it or not, there doesn't exist a more sustainable alternative to palm to supply growing demand for vegetable oil on a global scale. Fostering a strong collaborative working relationship between environmental NGOs and palm oil producers on forest preservation and wildlife protection may not be as sexy as shaming the bad actors on the international stage, but is equally or more important in affecting long-term meaningful change.

Posted by
Annika Barnes
on 09 Jul 2010

The focus on Indonesia and the negative practices by certain companies in the palm oil
industry has obscured the realities of the industry and fails to consider the positive progress that has been made.

The Malaysian example demonstrates how palm oil can help bring developing country populations out of poverty while producing a highly efficient and increasingly necessary source of nutrition for the global marketplace. Consider the “Land to the Landless” programs instituted by FELDA and FELCRA in the 1960s, which today has created a viable livelihood for over 1000,000 small farmers (the average FELDA settler’s income in 2008 was $1074 USD, well above the national poverty line of income of $209 USD). Compare this with conditions in the Malaysian countryside prior to the 1960s. The Malaysian example also shows why a properly structured system of land use laws can allow the palm industry to develop while maintaining vast amounts of natural forest cover. Forests still cover over 63% of the landmass of Malaysia. Compare this with the U.S. (33.1%), the U.K. (11.8%), or Germany (31.7%).

The Malaysian government continues to lead the way in ensuring an increasing level of palm oil production without increases in land use conversion. The work done by the Malaysian Palm Oil Board represents the cutting edge of technology involving the increase in palm oil
yield. The current average yield of palm oil plantations is slightly over 3.7 tons/ha/year, yet the MPOB has developed and commercialized strains of oil palm seed that can produce over 10 tons/ha/year. These new seeds will be the key to meeting global demand without converting new land to palm oil plantations.

The examples are to many to list here, but by focusing on the positive contributions of
respected players in the palm oil industry we will be able to support a crucial global industry while avoiding the unnecessary destruction of virgin rainforests.

Posted by
Brian Young
on 09 Jul 2010

"But instead of acknowledging this and addressing concerns head-on, marketing bodies for the industry have tended to expend efforts on denial and greenwashing. The integrated market campaign includes Web sites, blogs, think tanks, editorials, and advertisements."

Oh, i get it: corporations that are clearcutting old-growth forests don't want to stop. And 'green' NGOs - like Greenpeace and RAN - need to build consumer demand for certified 'sustainably' clearcut old growth forests.

What a joke! Certification schemes like the industry-green partnership known as the Forest Stewardship Council are distractions from the real demands which will protect old-growth forests: end industrial logging of old growth forests!

Of course, RAN's and Greenpeace's rotating shakedown operations between one terrible bank, another terrible timber corp., another bank and another palm oil corporation, isn't going to change things b/c there are thousands of such operations and banks and we know enough about 'improved' timber operations certification schemes to know that they don't do enough:

www.fsc-watch.org

Simple questions: if certification is so great and what we should be channeling all the environmentalist outrage and species death of our disappearing wild forests, then why does the best certification scheme that exists (the FSC) allow industrial clearcuts of old-growth forests?

Why don't 'radical' enviro groups like RAN and Greenpeace recognize the ending of industrial logging as the simplest, clearest path to preserving carbon sinks and biodiversity and deploy their considerable resources to rally members and newbies to this goal (with pressure on governments - naming legislators/heads of state that are in the way etc.)?

b/c they are fake 'greens'.

LT

Posted by
linda turillo
on 17 Jul 2010

Interesting read. I hate to turn this into a East vs West thing but historical perspective stands: Europe and the U.S. have achieved their economic growth and prosperity agricultural and industrial revolutions of the last two centuries by developing and maximising/depleting their own natural resources, as well as of those in colonised lands.

But different rules seem to apply to the developing worlds where Western interests (governments, lobbying groups, NGOs etc), are quick to deny these same opportunities to countries like Indonesia and Malaysia, two countries you've mentioned in relation to the palm oil industry. Never mind the wealth and development oil palm, paper/pulp etc has brought to these countries, in terms of job creation, health education and infrastructure etc.

It is more that a little arrogant for so-called campaigners to speak on behalf of locals in far out, rural parts of Indonesia who have not only come out poverty thanks to these industries, but now have the chance to enjoy litle things in life that most of us in developed nations take for granted.

Development is complicated. The goal should be for government, commercial interests and civil society to cooperate in finding sustainability solutions, not just critisizing and simplifying very complex situations into misleading and frankly simplistic arguments (i.e. Greenpeace's eating Kit kat = killing orangutans).

Otherwise, many of these arguments take on a nationalistic and protectionist tone that is pretty ugly, with double standards on who has the right to development.

Lets not kid ourselves, corporations can have a huge role to play by paying for the expensive work of protecting natural resources, the cost of which may government cannot adequately bear. Making them the enemy every time is easy, but counter productive in the long run.

Posted by
Jenna Manon
on 20 Jul 2010

Nice work, but don't take your eye off what's going on here in the states! It's even worse.

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